The New York-based bank said Friday it would record an after-tax gain of about $722 million from the sale of its 9.9 percent holding in HDFC. Citi sold 145.3 million shares at a discount of 6.2 percent to the stock's closing price Thursday. The company hoped to gain up to $2.1 billion, according to a term sheet.

"We are pleased with the results of our investment in HDFC," Pramit Jhaveri, chief executive of Citi India, said in a statement.

Many analysts expect global banks to step up sales of their holdings in Asian companies in the coming months as they beef up capital positions in response to strict new global regulations that will require lenders to keep higher reserves to absorb financial shocks.

"Many of these investments were made when Western banks were flush with cash and Asian valuations were cheap," Jeff Yeh, chief investment officer at Capital Investment Trust in Taipei, told Reuters.

"With tighter capital requirements and more problems back home, it seems reasonable that some of these banks are thinking about selling their Asian investments at a profit," Yeh added.

Other banks have also been selling Asian assets ahead of the new Basel III capital-reserve rules that will come into effect next year.

HSBC Holdings PLC (NYSE: HBC), Europe's largest bank, this week said it was withdrawing from consumer banking in Japan and closing down six branches four years after starting the business. The London-based bank was seeking buyers for its Premier unit.